Novadaq Technologies (NVDQ) Guides Q4, FY17 and FY17 Below the Street

NOVADAQ Technologies Inc (NASDAQ: NVDQ) announced preliminary financial results for fourth quarter and full year 2016 and provided 2017 financial guidance. The Company also announced that it has entered into a credit facility with MidCap Financial consisting of a term loan and a revolving line of credit that provide NOVADAQ with financing of up to $60 million.

Preliminary and unaudited revenue for fourth quarter 2016 is expected to be approximately $20.2 million, reflecting growth of 1% over the fourth quarter of 2015. Based on this preliminary estimate, recurring revenue is expected to be $9.5 million which includes sales of consumables, services and components and reflects a 42% year-over-year increase. (*** consensus is $25.4 million)

Preliminary revenue for full year 2016 is expected to be approximately $80.2 million, reflecting growth of 26% over full year 2015. Revenue for full year 2016 is expected to include approximately $32.9 million in recurring revenue, reflecting a 41% year-over-year increase. (*** consensus is $85.33 million)

“Our fourth quarter revenue results and preliminary guidance for 2017 reflect strong demand for usage of SPY Technology as well as the shift in our strategic direction toward greater emphasis on procedure expansion and recurring revenue. We believe this evolution of our business model will provide greater sales leverage, broader market accessibility and enhanced revenue visibility,” said Rick Mangat, NOVADAQ’s President and Chief Executive Officer. “We are encouraged by the traction we are gaining with hospitals and other surgical centers as recurring revenues continue to contribute increasingly to total revenue.”

Mr. Mangat continued, “The financing announced today strengthens our balance sheet and ensures adequate capital is available to support our growth initiatives and working capital needs.”

2017 Financial GuidanceNOVADAQ anticipates revenue for full year 2017 to be in the range of $98 million to $102 million, representing growth in the range of 22% to 27% year-over-year. NOVADAQ anticipates recurring revenues for full year 2017 to be in the range of $48 million to $50 million, reflecting growth of 45% to 51% year-over-year. (*** consensus is $111.3 million)

Credit Facility NOVADAQ has entered into a credit facility with MidCap Financial consisting of a term loan and a revolving line of credit that provide NOVADAQ with new financing of up to $60 million. Under the terms of the agreement, up to $30 million will be available under a term loan agreement in three equal tranches between closing and December 31, 2018. In addition, the Company has the option to borrow up to $30 million through a revolving line of credit for a term of up to 60 months, with an additional $15 million to be committed if certain conditions are met. NOVADAQ plans to use these loan facilities to strengthen its balance sheet and provide financial flexibility, at a low cost of capital. Piper Jaffray & Co. acted as sole and exclusive lead arranger and bookrunner in connection with the financing and Morrison and Foerster acted as lead counsel for NOVADAQ.

NOVADAQ management is scheduled to present an update on the Company’s business at the J.P. Morgan Healthcare Conference on Wednesday, January 11, 2017 at 10:30 a.m. Pacific Time. The presentation will be webcast live and archived for 90 days on the Company’s website at http://www.novadaq.com under the “Events” tab in the Investors section.

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